The right way for New York to legalize sports betting

By Mark Lipparelli

|NEW YORK DAILY NEWS|

May 24, 2018 | 3:02 PM

Regulate it well, and allow mobile wagering

After a long winter of wondering how the U.S. Supreme Court would rule, the court has said the federal ban on sports wagering was in violation of the Tenth Amendment, and any state can now legalize betting on sports. Estimating the volume of illegal sports gambling by Americans is itself now a sport. Such estimates range between $60 to $400 billion a year which could now be converted to new legal betting markets.

For cash-strapped states, sports wagering tax revenue could help solve the vexing fiscal challenges that rarely shrink. But to get the desired return — a trusted, transparent and safe betting market that produces revenue for the state — the authorizing law must be structured the right way.

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I served as chairman of the Nevada Gaming Control Board and can tell you the structure of law and regulations will be the determining factor in the success (or failure) of sports betting in any state.

Keep in mind: Current customers of illegal offshore sportsbooks have been delivered an increasingly high-quality online product for some time now. It's why the market has grown so large. Consumers want convenient, efficient and fun products, and like it or not, many U.S. sports fans already know how the game is played.

New York starts out way ahead of the curve here. The Legislature recognized the federal ban was problematic, so they passed a law in 2013 stating if there is a change in federal law, then sports betting would immediately become legal in New York at the casinos set to open around the state. This was prescient and wise — and the state is now prepared to take advantage of the opportunity the U.S. Supreme Court created.

But the law, already a bit dated, needs some immediate improvements if New York wants to have a successful sports betting market that protects consumers, safeguards sporting contests from attempts at manipulation or malfeasance, and generates economic benefits such as jobs and tax revenues for the state.

First and foremost, the law only authorizes in-person sports betting at those four upstate casinos. Stating the obvious, we live in a mobile world and consumers not only expect but demand to be able to conduct transactions and enjoy entertainment online.

Nevada recognized this, but was slow to adopt a fully functioning mobile model. Now fully implemented, it is clear we should have done it sooner. Nevertheless, sports betting worked in Nevada because we had a government-created monopoly, the only location that could offer full blown sports betting options. New York, and other states, will not have that advantage.

The illegal market is both wildly popular and efficient — an estimated 80% of it is conducted online. To draw customers to the legal market, the state has to offer mobile betting or consumers will continue to turn to the more convenient, mobile options in the illegal market.

Relying on fans in Brooklyn to travel hundreds of miles to place a bet, when they can simply do it from their couch, is not a good business model. Account-based wagering and traditional e-commerce tools are actually far more effective in instantly tracking bets for integrity monitoring, as opposed to relying on in-person over the counter cash transactions.

Further, the current law includes little statutory language to protect the integrity of both sports and bettors.

A strong sports-betting law would require reporting obligations on sportsbooks such as immediately reporting of suspect or abnormal betting patterns.

It would also require cooperation with corruption investigations brought forward by regulators and/or the sports leagues to prevent, as an example, an athlete or referee from betting on their own contests.

New regulatory tools should also be set in place as a formal mechanism to approve certain types of proposition wagers that are easy to manipulate — like will the first play of a football game be a run or a pass, or bets placed on lower level contests such as high-school sports. Right now, New York has a law on the books that authorizes betting with none of these protections, and is lacking in a number of other important areas.

It's fair to assume the state is not going to allow an antiquated, loosely regulated sports betting market go into effect. States like New Jersey, Pennsylvania, Connecticut and others are leaping at the opportunity and will have sports betting in place in short order.

The time to move new legislation in New York is now. The state was forward thinking when they passed a sports betting law in preparation for today. Now that the federal law has been struck down, the state needs to finish the job and quickly pass smart regulations to stay competitive in the market.

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Lipparelli is the founder of Gioco Ventures, a gaming industry advisory firm. He served as chairman of the Nevada Gaming Control Board and a Nevada State senator.